Fast Food Industry Market Structure Essays Examples

Fast food industry falls under monopolistic competition market structure whereby every business has to adopt the best competitive strategy in order to gain an advantage in the market. Firms in fast food industry are price takers. The industry has several producers who are collectively competing for the available customers through product differentiation any struggling to meet the needs of the customers through producing their preferential products and services. This is achieved through providing a variety of choices in their menu with each company offering different choices in their menu. Companies such as McDonald, Burger King and Subway among others constantly compete with each other by offering variety of products and also playing with the price of the menu as a form of marketing and promotions strategies. Another characteristic of this market structure is that there is limited restriction to entry in the fast food market as long as the businesses get to pay the licensing fee. The current fast food industry is composed of several restaurants both small and big corporations that are constantly competing for the dollar of the available consumers.
The introduction of ‘one Dollar Menu and more’ by McDonald corporation was essentially as a result of the rising costs of ingredient especially the price of beef while the price of the company’s products remained constant, an issue that had made the company experience reduction in profits. This has received mixed reactions from the consumers, a situation that could lead to a shift in demand as customers may shift to buying alternative products with lower prices. The company is however aware of the effects of elasticity of demand and they have reacted by playing around with pricing system such as offering 4.99 dollars instead of five dollars on an item to the customers who are more conscious of their spending. The company is also carrying out extensive promotions particularly focusing on health dietary items in their menu.